Bench Press

The Open Science movement is driven by the idea that collaboration and openness are good for innovation and discovery. After all, the logic goes, who is more likely to discover a cure for cancer: five research groups with different sets of skills and specializations who don’t share any information with one another, or five identical groups who actively pool their knowledge?

Ironically, that reasoning seems to have completely skipped over the biotech/pharmaceutical industry who seem intent on pursuing the “divided we fall” approach despite the escalating costs of drug development. The application of openness itself is especially relevant here, as a significant piece of the $800 million – $1.2 billion price tag that goes with bringing one drug to market is the cost of failed R&D projects.

This problem is one that is not only a burden on the shareholders and executives at these companies, but also a burden on the healthcare systems of people around the world, which end up paying more and waiting longer for drugs to make it through a company’s pipeline.

About a month ago, the New York Times cast a spotlight on this problem:

Although many companies have committed to publishing the results of clinical trials, whether or not they succeed, drug makers don’t typically publish information about projects that fail at an earlier stage. A result is that companies waste many millions going down experimental paths that their competitors have already found to be dead ends.

M.I.T. is proposing dead-end drug disclosure, a concept that goes by a euphemistic mouthful: “precompetitive information sharing.”

Drug makers may realize that the financial and medical value of sharing such information outweighs the competitive risk, said Dr. Gigi Hirsch, the executive director of the M.I.T. Center for Biomedical Innovation, the locus of the drug project. “There should be more information available about failed compounds in the interest of the greater good,” Dr. Hirsch said.

The traditional response from the pharmaceutical industry is one that is familiar to Open advocates – that intellectual property and proprietary platforms are necessary for the returns which drive investment in these spaces. But, this ignores two things.

First, the act of sharing information on failed assay hits helps to reduce the cost and time of development. The decision to invest in a particular R&D project is driven by returns, and returns are driven by development costs and the time it takes to get “money back”. While being more open about internal failures and successes will do little to change the cost of marketing, clinical trials, and many aspects of development, it will reduce a large portion of the time and cost of initial R&D (because of the wider availability of information) and the cost of failure (as there would be no need to pursue avenues of research on paths that have already been deemed a failure). So even if the prices and number of drugs sold diminish slightly due to the inability of a company to hold on to some early-stage proprietary advantage or the release of some of the details on their compound library, the time to market and cost of development diminish as well, helping to preserve the return on investment necessary to provide for the level of drug innovation and discovery that patients and doctors want.

Secondly, a move to openness does not necessitate unprofitability. It wouldn’t be realistic to ask companies to pursue a path which destroys the shareholder value they’ve been entrusted to protect. But, the fact that technology companies like Google and Nokia have been able to push open standards and open source yet retain profitability and innovation should hopefully signal to bio/pharmaceutical companies that it is possible to have both shareholder value and openness.

The path to profitable openness that technology industry practitioners like Google pursue is no different than the path that any company pursues: specialization. Google, for example, has specialized on high quality search results, effective advertisement targeting, and IT infrastructure management. As a result, there’s no reason for Google to prevent the broader technology industry from having access to the source code for its Chrome web browser, Android mobile operating system, or Google’s rich APIs to access the information you can find on its websites. In fact, Google seems to have understood that keeping its information closed would reduce innovation on the web, which would in the long-run hurt its own growth and profitability prospects.

I’d humbly wager that the value of protecting early stage failure and platform information is relatively minor in the grand scheme of pharmaceutical company value (and in fact some companies do publish failures, albeit only years after the experiment). I’d even humbly bet that major drug companies probably have much more significant expertise and differentiation in the steps after initial R&D, such as in compound refinement, clinical trials operation, process development, and computational analysis, etc. All of this should, at the minimum, shield existing drug companies from the “risks” of opening up on early-stage R&D failures and could even help existing drug companies compete by emphasizing these new capabilities as the determinants of success.

Nobody is saying that this path will magically materialize and produce awe-inspiring levels of profitability and growth overnight. But, when an industry is on the edge of a patent cliff (most blockbuster drugs are expected to become generic in the next couple of years), when its primary source of “value creation” seems to be in buying smaller companies, and when nations around the world are struggling with healthcare costs, I’d assert that the bio/pharmaceutical industry needs to change its practices.

As for how – I would propose the following compromise.

1. First, the NIH, PhRMA, or some other neutral authority should define a set of standards for what information should be contributed (balancing the desire to foster innovation through openness and the desire for companies to maintain the closedness they need to build proprietary advantages along other dimensions), create a standard for secure information sharing (which protects any individuals and patients and proprietary pipeline-related information) and govern compliance.
2. This body should then set up an information exchange/database for participating companies, academic institutions, government research centers, and medical institutions to share information and prevent non-compliant companies from gaining access (it’s not a perfect solution, but it could help assure companies who are worried that they will give up all of their information but not receive any in return).

This road would likely be a long and difficult one, but given the stakes and the potential benefits, I think it is one well worth taking.

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